If a country pegs its currency to a foreign currency, it no longer has the ability to use monetary policy to stabilize the economy because:
A. it no longer has a central bank.
B. banks will begin to hold 100 percent of their deposits in reserves.
C. monetary policy must be used to keep the exchange rate's market equilibrium value at its official value.
D. it must eliminate its currency from circulation and replace it with the foreign currency.
Answer: C
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Producer surplus is the
A) cost of the good summed over the quantity sold. B) demand for a good minus the supply summed over the quantity sold. C) price of a good minus the marginal cost of producing it summed over the quantity sold. D) marginal cost of producing it summed over the quantity sold.
Refer to Figure 4-8. What is the value of the portion of producer surplus transferred to consumers as a result of the rent ceiling?
A) $40,000 B) $100,000 C) $125,000 D) $140,000
The effects of financial deregulation on the IS and LM curves ________ the volatility of interest rates as the curves shift, such as the change in the amount that the interest rate must ________ when the Fed conducts open market purchases
A) decrease, rise B) decrease, fall C) increase, rise D) increase, fall
Retailers often do not find it profitable to engage in promotional activities because
a. They cannot reap the full benefits of the promotion b. They have to share the benefits of the promotion with the manufacturer c. They are wary of competing retailers' ability to "free ride" on their efforts d. All of the above